AMSTERDAM, Sept 11 (Reuters) – Shares in Prosus, a
spin-off from Naspers that includes the e-commerce group’s 31%
stake in Chinese tech giant Tencent, surged more than 25% on
their stock market debut in Amsterdam on Wednesday, creating one
of Europe’s largest internet companies.

Prosus comprises South African group Naspers’
global empire of consumer internet assets, including the stake
in Tencent, the world’s biggest video game company and
home to China’s hugely popular WeChat social media platform.

“We’ve become so big that further growth of our company on
the JSE (Johannesburg Stock Exchange) would be difficult,”
Naspers CEO Bob van Dijk told reporters after the listing, which
values Prosus at more than $100 billion.

“The idea with today’s listing is emphatically that we find
a new generation of investors here, on the Euronext, for our
further growth,” he added, referring to the Amsterdam exchange.

Euronext had given an indicative price of 58.70 euros per
share for Prosus, derived from Naspers’ value in Johannesburg.

Prosus shares jumped to 76 euros on opening and traded at
74.52 euros at 1125 GMT, a 27% increase, on volume of 4 million
shares. With around 1.6 billion shares registered, that implies
a market capitalization for Prosus of around 119 billion euros
($131 billion), close to the market value of its Tencent stake.

Shares in Naspers, which is retaining a controlling 75%
stake in Prosus, fell a corresponding 31% in Johannesburg,
acting similar to a share that has gone ex-dividend.

The spin-off marks the end of an era for Naspers as it looks
to move beyond the legacy of former CEO Koos Bekker’s prescient
investment of just $34 million in Tencent when it was a startup
in 2001, one of the most lucrative bets in corporate history.

The stake in Tencent is now worth $130 billion and has
buttressed Naspers’ rapid growth towards becoming Africa’s most
valuable listed company.

Prosus becomes the third-largest stock on the Amsterdam
exchange after Shell and Unilever, and
Europe’s No.2 tech firm after Germany’s SAP.

European players are still, however, dwarfed by the likes of
Facebook and Amazon in the United States.

The Tencent stake has been worth more than Naspers itself
for years, and dominated the $103 billion group’s finances. One
motivation for spinning off Prosus was to narrow that value gap.

“Essentially you know you’ve been buying into Naspers and
getting the 31% stake in Tencent, and then the rest of the
business you’re getting for free,” said Morningstar analyst
Johann Scholtz.

“Part of the reason for that discount has really been the
way that Naspers has become ever more significant to the South
African all share index.”

Naspers had accounted for more than 20% of the index.

“Obviously for South African fund managers that creates a
massive concentration risk, especially those that manage pension
funds,” he said.

FOOD DELIVERY FIRMS

Prosus also has stakes in fast-growing food delivery, social
media and payments companies in China, India, Brazil and Russia.

In the food and delivery sector, it owns stakes in Delivery
Hero, Takeaway.com, Latin America’s iFood,
and India’s Swiggy.

For the fiscal year ended in March 2019, Prosus reported a
15% rise in revenue to $2.65 billion, and its operating loss
narrowed to $418 million from $615 million a year earlier.

Prosus accounts for its Tencent stake as an “equity
accounted investment”, which added $3.41 billion to full-year
pretax profit.

Prosus’ net profit was $4.25 billion, thanks to a $1.6
billion windfall on its sale of a 10% stake in Flipkart to
Walmart.

Jasper Jansen, an analyst at the Dutch shareholders’ rights
group VEB, welcomed the listing.

“We love the fresh blood – finally there’s a real company
listing here thatâ€™s active in the new economy,” he said.

However, he criticized Naspers’ decision to maintain a
two-class share structure which gives its biggest shareholders
extra voting rights in some circumstances.

Van Dijk responded that the company did not expect to
exercise extraordinary voting rights – which would become active
if Naspers’ stake in Prosus fell below 50% – in the foreseeable
future.

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